Reed Elsevier1
is suing2TheLaw.net
Corporation. Unlike some past litigation by established, large legal
publishers against new entrants into the market for online legal information,
this suit is not about taking mass quantities of their caselaw, rather Reed
is concerned about the way TheLaw.net competes.

making false or misleading statements
about its own products and services;

making false or misleading statements
about Reed's products and services;

making false or misleading statements
about TheLaw.net's relationship with Reed's products and services;

making false or misleading statements
about an alleged anticompetitive affiliation between Reed and West;8

misusing Reed's trademarks; and

deep linking and framing Reed's
various websites in ways that alter them.

Reed seeks:

an injunction to stop TheLaw.net
from continuing to do all of the things about which it complains;

payment by TheLaw.net to Reed of
all profits from its violations, with interest;

payment of damages suffered by
Reed, with interest;

payment of punitive damages;

payment of Reed's attorney fees;
and

payment of court costs.

After briefly describing
TheLaw.net, this article discusses how the complaint arose, details of the
complaint, the response of TheLaw.net to the time of writing, settlement negotiations,
a preliminary injunction that has been entered, discovery proceedings that
are under way, and the clashing views the parties have of the purpose of the
litigation.

TheLaw.net
in a Nutshell

TheLaw.net
sells a software interface to: (A) VersusLaw's caselaw databases (including
subscription); and (B) other legal resources on the web. The company
worked with the Norwegian producer of the alternative web browser, Opera,
to create a customized, standalone browser. It incorporates an extensive
collection of categorized links to selected law-related websites. For
further information, see Roger V. Skalbeck, The
New Legal Browser That Could... TheLaw.net Examined and Explained, LLRX.com™,
January 15, 2001.9

How
the Complaint Arose

Reed's complaint says
TheLaw.net "sent web advertisements and unsolicited, mass e-mails in
interstate commerce to thousands of Plaintiffs' customers and prospective
customers." I spoke with Michael Jacobs, General Counsel for the
plaintiffs, Charles Faruki, attorney for the plaintiffs in the litigation,
and Mark Feighery, who until recently was the Director of Corporate Communications at LEXIS Publishing.
Jacobs said concern first arose when he and most of the members of his staff
received some of those e-mails. They saw trademark problems immediately
because of use of the term "Wexis." After looking at the TheLaw.net's
website and product, they saw more trademark problems because of use of the
Shepard's®
mark.

Whitney says,
and Reed acknowledges, that Reed initiated the litigation without any preliminary
communication to TheLaw.net setting forth its concerns. Faruki and Jacobs
said Reed viewed the conduct as egregious, calculated, and not accidental.
They pointed out that they have sometimes pursued the same course in the past
against defendants both large and small, including West Publishing Company
when it continued to make reference to Shepard's® after West's license
to use Shepard's® had expired.

Additional concerns arose
about probable breach of license restrictions on the use of Reed's Martindale
Hubbell database. That database is salted with records for fictitious
names. Salting databases with various sorts of identifying data or traits
is a common practice of database producers. They use salting as a means
of proving that their data is the source of someone else's data. Some
of the fictitious records contain functioning e-mail addresses. Jacobs
says Reed learned that some of the functioning e-mail accounts listed for
fictitious names in the Martindale Hubbell database received e-mail advertisements
from TheLaw.net.

LAW-LIBers responded
to my request to send me copies of the e-mail advertisements. I received
many copies of nine different advertisements. A number of law librarians
who sent me copies expressed annoyance at the e-mail campaign and frustration
with having to explain to lawyers and firm managers why they did not believe
many of the core claims and comparisons made in those advertisements.

The advertisements are
bold and make statements directly comparing TheLaw.net's products and services
with those of LEXIS®
and The West Group. I spoke with Mark Whitney, President and CEO of
TheLaw.Net Corporation. He said, "We’re real aggressive in marketing.
We’re a marketing company before anything else. We’re a software company.
We’re trying to sell software.”

Coverage.
Reed complains that TheLaw.net "misleadingly implies parity with
the LEXIS®
database’s years of coverage and tribunal coverage." It focuses
on a comparison chart titled "Wexis v. TheLaw.net Corporation:
A Case Study." Reed complains that the chart is misleading
because "it fails to list the entire range of cases and tribunals
covered by Plaintiffs under the LEXIS®
mark and only lists the cases and tribunals covered by Defendant."

Database Size.
Reed complains that TheLaw.net falsely claims it offers "the third
largest searchable database of case law, behind Plaintiffs and West."

Timeliness.
Reed complains that TheLaw.net falsely claims its "database of cases
is also more current than either of the large, better known pay-per-view
databases."

Cost.
The complaint says, "Defendant claims that Plaintiffs are in the
'pay per view business' whereas Defendant is in the business of offering
'free access' to third party sites. In fact, unlike Defendant, Plaintiffs,
through their web sites, offer free access to over 20,000 third party
law-related web sites, categorized by Plaintiffs at absolutely no cost
to the user." In addition, Reed says it offers "a flat
rate service with unlimited access to Plaintiffs’ LEXIS®
services."

Removal of Reed's
Content. TheLaw.Net's browser is designed to access Reed's www.bender.com
and www.shepards.com sites.
The software does not simply access those sites, however. Reed says
it removes content from Reed's genuine www.bender.com
site. This results in as series of complaints by Reed. The
complaint says TheLaw.net "falsely represents to consumers without
notice that the site they view is genuine and complete." As
a result, TheLaw.net "misrepresents the nature, characteristics,
and qualities" of Reed's services. Reed says TheLaw.net enhances
its product with content from Reed's sites, yet diminishes Reed's products
by removing content from them. Some of the removed content is products
and services from which Reed normally derives revenue. Reed complains
of interference with its ability to obtain revenues.

Affiliation
and Source Confusion

When the browser accesses
Reed's sites, it adds a frame on the screen within which it displays Reed's
diminished content. According to Reed, the frame "hyphenates Defendant’s
name, TheLaw.net, and Plaintiffs’ SHEPARD’S®,
and SHEPARD’S CITATIONS marks, and MATTHEW BENDER®
mark and name and adds other elements." Reed complains that this:

falsely suggests
to consumers that there is some nonexistent affiliation, connection, authorization,
license, sponsorship, endorsement, or approval;

falsely designates
the origin of TheLaw.net's products and services;

enables TheLaw.net
to call attention to itself, its products, and its services; to trade
on Reed's goodwill; to gain acceptance for its products on the reputation
and goodwill of Reed and its marks;

unjustly enriches
TheLaw.net at Reed's expense; and

dilutes the distinctive
quality of Reed's marks and lessens their ability to function as source
indicators

Can
I Shepardize®?

TheLaw.net provides FAQs
at its site. Prior to commencement of the lawsuit, one of them was titled,
"Can I Shepardize®
a citation, statute, rule or regulation?" It appeared as follows:

Reed complains that the
answer beginning with, "This is very easy to do," suggests that
TheLaw.net will explain how to access its SHEPARD's®
service through its site. Instead, the rest of the answer explains how
to perform citation searches in the full text databases. Reed calls
that use of the SHEPARDIZE®
mark a classic “bait and switch” and an intentional trademark infringement
designed to divert users to Defendant’s legal citation services.

The FAQ was at www.thelaw.net/faqs/search4.htm.
When I first looked at that URL, the content had been changed. The question
now reads, "Can I check the precedential value of a citation, statute,
rule or regulation?"

While law librarians
and professional legal researchers are not likely to be fooled that citation
searching is the same thing as using a citator, feedback from LAW-LIBers suggests
that an appreciable number of lawyers and law firm managers who make purchasing
decisions would have been taken in by the original "Can I Shepardize®
?" FAQ.

Can
They Say, "Wexis Duopoly?"

TheLaw.net's advertising
refers to Westlaw and Lexis as "Wexis," the "Wexis duopoly,"
or a "duopoly." Reed complains that this

dilutes the distinctive quality
of Reed's famous marks;

lessens the ability of Reed's famous
marks to function as indicators of source;

falsely designates the origin of
Reed's services;

deceives purchasers as to an anti-competitive
association between Reed and West;

disparages Plaintiffs by implying
an anti-competitive association or affiliation between Reed and West; and

tarnishes Reed's LEXIS®,
LEXIS-NEXIS®,
and NEXIS®
marks.

No
Answer Yet; Motion to Dismiss

I cannot
report on what TheLaw.net admits or denies concerning the complaint because
an answer has not yet been filed.

TheLaw.net
has filed a motion to dismiss under Rule 12(b)(6), Fed.R.Civ.P. That kind
of motion contends that the complaint fails to state a claim. It assumes,
solely for the purposes of testing the complaint but not generally for all
purposes in the litigation, that all the material facts alleged in the complaint
are true, but don't add up to anything that a court can call foul on or remedy.
Instead of saying "No" to a complaint, a Rule 12(b)(6) motion says,
"Even if it is true, that does not mean we've done anything wrong."

Clashing
Views of Litigation Motives

Whitney views the litigation
as competitive intelligence by litigation. Reed has served TheLaw.net
with several court papers making discovery requests including a request for
production of documents, interrogatories, requests for admission, and a motion
for expedited depositions. Taken together, the discovery requests examine
virtually everything about TheLaw.net including in-depth details of its website,
its software, its marketing, possible merger with or acquisition by other
firms, any contemplated business with The West Group, material on the products
and services of its competitors, its e-mail systems, its e-mail lists, and
its financial condition. TheLaw.net has filed a motion for delay of
discovery and so far has refused to provide any of the information Reed seeks.

Whitney told me:

“When the process server
first tried to serve our legal counsel at his home, the next day he called
them [Reed] and asked them what they wanted. They e-mailed a copy
of the complaint to us. The next day – basically within 24 hours –
we contacted them back and said we’d agree to basically everything they
wanted. They said, ‘No, that’s not good enough. We need to conduct
discovery.’ We were thinking of FedExing them a fishing pole.”

In a conference with
the court, TheLaw.net said it would stipulate during the pendency of the lawsuit
to refrain from doing the things about which Reed complains. The court
ordered TheLaw.net to draft a form of preliminary injunction. Faruki
says the form drafted by TheLaw.net "really gutted it. The defendant's
written product did not match its words." Reed offered a different
form. Faruki says the court heard arguments on the two forms and adopted
the one proposed by Reed. On June 18, 2001, the court issued a Preliminary
Injunction by Consent. Faruki says that's Reed's draft. Whitney
says, "The background behind the injunction is that WE drafted it and
pushed it along."

Faruki and Jacobs say
Reed has no indication that TheLaw.net is willing to make the preliminary
injunction permanent. They acknowledge that if the injunction were made
permanent, Reed would no longer need some portions of the discovery, but would
still need the portions that relate to damages. Reed does not know yet
whether TheLaw.net drew away any of its existing customers and says, "That
information is in the possession of TheLaw.net."

Jacobs and Faruki say
that Reed is vigilant in protecting its intellectual property, and that the
law requires vigilance to maintain one's rights in intellectual property.
They also say:

Reed tries to compete
fairly and by the rules by, for example, screening its own advertising.
We expect our competitors, large and small, to do the same. We believe
TheLaw.Net has not played by the rules. Unfortunately it appears necessary
to go to court to get them to play by the rules. We hope this can
be accomplished without drawn out litigation, but that's up to TheLaw.net.

Whitney says Reed's approach
buries a small firm. He says, “The bottom line is that we don’t have
the time, money, or inclination to litigate.We view this as a business problem. We don't want to let this
be all about lawyers getting paid. We stipulated not because we think
we did anything wrong, but so we can focus on business.”

Footnotes

1
The plaintiffs are Reed Elsevier Inc. through its LexisNexis and Shepard's
divisions, Reed Elsevier Properties Inc., Matthew Bender & Company,
Inc., and Matthew Bender Properties Inc. For the convenience of brevity,
this article refers to them collectively as either Reed Elsevier or Reed.
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2
The suit is pending in the U.S. District Court for the Southern District
of Ohio, Western Division (Dayton), Case No. C-3-01-116, filed March 16,
2001. <back to text>

3
Under Section 32(1) of the Lanham Act, 15 U.S.C. § 1114 (1), under Section
1329.65 of the Ohio Revised Code, and under Ohio common law.
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4
Under Section 43(a)(1) of the Lanham Act, 15 U.S.C. § 1125 (a)(1), and under
Ohio common law.
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5
Under Section 43(c) of the Lanham Act, 15 U.S.C. § 1125(c), and under Ohio
common law. <back to text>